Question

In: Accounting

Since managerial accounting does not follow strict reporting requirements like financial accounting do you see any...

Since managerial accounting does not follow strict reporting requirements like financial accounting do you see any ethical issues that may arise? Should there be specific reporting requirements ?Do not forget APA format on your sources, in-text citations.

Solutions

Expert Solution

Financial accounting works mostly for external users. They may be investors, creditors, auditors or analysts. This type of business accounting is supposed to correspond to specific principles and guidelines Generally Accepted Accounting Principles. These principles outline the major rules according to which the company’s accounting processes should be conducted and managed. Besides, they define the standards and terms for issuing reports on the company’s financial information.

Managerial accounting is concerned with providing information to managers that is people inside the organisation who direct its operations

ETHICAL ISSUES arise are :

since managerial accounting could be confidential and are done as per management’s preferences that leaves a lot of decisions to subjective judgment. As one of the primary purposes of managerial accounting is self- monitoring within a firm, it can lead to personal preferences, biases and favoritism, or even sabotage due to interpersonal rivalry in the firm.

The Institute of Management Accountants, USA lists four areas of ethical concerns. They are:

1. Competence

2. Confidentiality

3. Integrity

4. Credibility

Providing wrong information or wrongly accounting for financial information can gravely hurt the corporation for they will not be able to get the true picture. By the time they can figure out that something is wrong in the managerial accounting much damage could have occurred and the existence of the corporation could be in jeopardy. Additionally, a failed corporation could negatively affect employment and income of employees. This in turn can impact families and potentially neighborhoods and towns


Related Solutions

Since managerial accounting does not follow strict reporting requirements like financial accounting do you see any...
Since managerial accounting does not follow strict reporting requirements like financial accounting do you see any ethical issues that may arise? Should there be specific reporting requirements? Do not forget APA format on your sources, in-text citations
One of the differences between Managerial Accounting and Financial Accounting is reporting flexibility. Financial reporting is...
One of the differences between Managerial Accounting and Financial Accounting is reporting flexibility. Financial reporting is restricted by Generally Accepted Accounting Principles whereas reporting in Managerial Accounting has fewer rules. Why is it permissible to violate Generally Accepted Accounting Principles when preparing reports used strictly by company management? Should external users always have the same information as internal users?
How do you see the financial reporting requirements for companies shifting in 10 to 20 years?...
How do you see the financial reporting requirements for companies shifting in 10 to 20 years? Are they going to become more stringent or more relaxed? Are countries across the globe going to standardize their filings into a single system?
1. In comparing financial accounting with managerial accounting, managerial accounting A.    Follows GAAP or IFRS reporting...
1. In comparing financial accounting with managerial accounting, managerial accounting A.    Follows GAAP or IFRS reporting standards. B.    Emphasizes timeliness and sub-unit reporting such as business units, divisions, departments. C.    Reports to parties external to the company D.    Emphasizes financial consequences of past activities 2. When production decreases A.    Variable costs per unit decrease. B.    Variable costs per unit increase. C.    Total variable costs increase. D.    Total variable costs decrease. 3. Which of the following is an indirect production cost...
How do financial and managerial accounting differ? What do financial and managerial accounting have in common?
How do financial and managerial accounting differ? What do financial and managerial accounting have in common?
In financial accounting, why is reporting control procedures required (in governmental and GAAP reporting requirements) and...
In financial accounting, why is reporting control procedures required (in governmental and GAAP reporting requirements) and what information does it reveal about the company?
Why do you think the accounting requirements forintangibles assets have become so strict?   Should all...
Why do you think the accounting requirements for intangibles assets have become so strict?   Should all intangible assets be recognised? Provide examples to help explain your answer.
International Financial Reporting Standards (IFRS) do not allow companies that follow the accounting rules to use...
International Financial Reporting Standards (IFRS) do not allow companies that follow the accounting rules to use LIFO for financial reporting. Your post should explain two things: 1. Why do you think LIFO is not allowed by IFRS but is allowed by GAAP in the United States? 2. Another area of accounting rules where there is a significant difference between US GAAP and International Financial Reporting Standards. Please include the reference where you found information to form your opinion in 1...
Do you see sustainability as something that will have a future impact on financial reporting and...
Do you see sustainability as something that will have a future impact on financial reporting and general accountability? (i.e. Rights to Resources, Potential Future Liabilities, Risk Mitigation, and Intangibles)
How does financial accounting differ from financial reporting?
How does financial accounting differ from financial reporting?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT